Brent Closes at $113.68 Amid Hormuz Disruption and Rising Tanker Costs
Key Facts
Brent crude closed at $113.68 a barrel on October 23, after $113.17 the previous day, according to EL7 data. Prices come amid disruption to shipping through the Strait of Hormuz and rising oil transport costs, two factors weighing on supply flows. An earlier Rabobank report on September 15 said escalating tensions in the Middle East threatened Saudi oil routes and deepened global supply risks. The bank added at the time that the risks had prompted it to raise its forecasts for oil, diesel and gas prices through 2027. The available figures show that the crisis’s impact extends beyond price movements: alternative routes impose additional costs while flows remain below prewar levels.
Analysts estimated in an Associated Press report published in September that at least 6 million barrels a day passed on average through the alternative shipping route around Hormuz. That represents 40% or more of the flows that passed before the war, according to their estimates. The agency reported that the strait’s closure at the start of the war cut off a sea passage that carried about 15 million barrels of oil a day. Alternative routes have therefore restored a significant share of supply, but not the full volumes that passed through the passage. This gap shows the extent of the pressure that continues to fuel supply concerns, despite oil being transported by other routes.
According to calculations cited by the Associated Press from a Rystad Energy research executive, 6 million or 7 million barrels a day were diverted to the southern route, in addition to 2 million barrels a day through the pipeline to Fujairah. Restored supply reached about 8 million barrels a day out of the 15 million disrupted, before accounting for alternatives. But about 7 million barrels a day remained missing at the time of the report in September. This means increased shipments through the alternative route do not offset the effect of volumes that remain out of the market. Six very large crude carriers had loaded 12 million barrels from Saudi terminals on the Arabian Gulf on the Monday before the agency’s report, according to data from Kpler. Those shipments offer an example of the volume that can be moved through Saudi terminals, while total flows remain below prewar levels.
The risks are also reflected in transport costs. Spot rates for tankers transiting Hormuz reached $1 million a day on September 11, equivalent to about $26 a barrel, according to Windward data cited by the Associated Press. In another report by the agency in October, spot tanker charter rates rose to hundreds of thousands of dollars a day. Transferring oil from one vessel to another can also take several days, adding time and cost to alternative supply routes. The report said operators continued working despite 28 attacks on ships during October, the highest number since the start of the war, according to Lloyd’s List as cited by the agency. These figures highlight the transport risks accompanying continued oil flows, without substantiating the unverified figures in the draft on shipping costs between the Gulf and China.
On infrastructure, Amin Nasser, Aramco’s chief executive, said in an interview with Al Arabiya Business that the capacity of the East-West pipeline had risen from 2 million barrels to 7 million barrels a day. The pipeline allows oil to be transported while bypassing the Strait of Hormuz, alongside the southern route and shipments from Saudi terminals. The U.S. Energy Information Administration estimated in an October report that the average spot price of Brent would be $96 a barrel in 2026, compared with $69 in 2025, and then $84 in 2027. For the fourth quarter of 2026, the agency projected an average of $105 a barrel, up $14 from its estimate the previous month, citing continued constraints on oil flows from the Middle East. These estimates put supply disruption at the heart of price forecasts, though their time horizons differ from EL7’s reported Brent close.
Supply constraints are countered by factors that ease price pressure. The Associated Press reported that global oil inventories were being drawn down by about 3.5 million barrels a day, while demand had fallen perhaps 5 million barrels a day because of higher prices and weaker growth in major markets. In the same report, Rystad Energy said the market was finely balanced and forecast a price of $85 to $90 a barrel in the final three months of 2026, then $80 to $82 in 2027 if Hormuz reopened. These estimates are conditional on the strait reopening, while October reports continue to point to risks to tanker traffic. A United Nations spokesperson urged the United States and Iran to pursue diplomacy, saying: "For the peoples of the region and the wider world, we need to reopen this waterway and reduce tensions."